The man AMP turned to help reinvigorate the fortunes of its wealth arm has some advice for Australians. Spend your money.

"Life isn't about saving as much as possible to die rich. Sometimes it's better to spend it now so you live rich," Joe Duran, the prominent US financial entrepreneur, tells AFR Weekend.

Duran is the 50-year-old founder of United Capital, the Californian wealth manager. Its 200 advisers oversee $US20 billion ($25 billion) of assets for 19,000 clients.

He left his home country of Zimbabwe as soon as he was old enough to travel the world. The penniless journeyman got a degree, met his wife and settled in Newport Beach, taking a role as an intern at a small investment firm. By his late 20s he'd worked his way to president of the firm and in 2001, age 34, he sold it to GE for a hefty sum.

"They have built this hybrid, human-based geographically untethered solution where you get an adviser for 30 basis points and they implement investments for 6 basis points," he says.

At present, Vanguard is capturing 90 per cent of every investable dollar in the US – as it approaches $US5 trillion of assets. The firm founded by the father of index investing Jack Bogle, only entered the advice space in 2015 but is already reshaping it.

Vanguard crossed $US100 billion of assets and is raising $5 billion a month, while rival BlackRock is making a push into providing products to advisers.

This is the "Age of Vanguard" and the game has changed. Duran says advisers of tomorrow better get used to engaging with clients at all hours, and on their medium of choice – the smartphone.

"For clients under 65, geographic connection and proximity is not an advantage because clients don't want to go to the adviser's office. They want to do everything on their phone.

"I know your [internet] is slow here in Australia but its inconceivable you won't be there in five years.

"Clients are going to say after dinner, 'hey, I want to buy that house in Noosa' – so they'll ask to change their plan, and expect to have a new one the next day that they can discuss.

This will change the economics of the industry.

"The stack of value has to change. It's all becoming more transparent to the consumer, and much less about the hidden revenues."

The squeeze, he says, will be felt by "the product manufacturer" that will be forced to lower fees.

"What I have seen at AMP is trying to work out how to go up the service stack, and how to help the adviser become indispensable," Duran says.

The model, he says, is to "deliver a world-class client experience, digitally mobile that gives the adviser the power to service twice as many clients at less cost."

But what is the value of advice?

Another disruptive threat has come in the form of robo-advisers that make financial and investment decisions based at low cost based on inputs provided by the individual about their objectives and risk appetite.

What the robots are missing

But Duran says the robots are missing two things that render them "badly suited to helping people with their financial life".

One is that they have no empathy or understanding. They cannot detect, for instance, when a couple says they can save $1000 a month, whether they actually mean it.

"It's binary – and everything boils down to a binary decision but most humans are incredibly nuanced," Duran says.

The other is that robots can't handle the complexity of humans and their ever-evolving lives.

"There is no way today, no matter what artificial intelligence you use, to code the nuance and implications of the circumstances that occur in a person's life."

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When robo-advice works

But, Duran believes there is a place for robo-advice.

The reality of financial advice is that it makes no economic sense for advisers to take on young individuals with little wealth, who in turn can't afford an adviser.

For under 35s, Duran explains, "it's is all about financial literacy".

"How do I budget? How do I get a mortgage? How do I invest? What does it mean? How much should I put aside for the future?

"That is going to be solved by robo [advice]. Humans do not have the time and capacity to work on that. When you have low complexity and the cost of being wrong is low, 'robo' is a great self service solution."

Another piece of advice to planners and their clients is, don't fool yourself into thinking you have some hidden investing talent.

"You can be as interested as you want in the world's capital markets, but it all boils down to what you can control."

And you cannot control share prices, interest rates and other variables of the financial system.

"You can control how much risk you take, the timing of events – such as taking a job, buying a house or retiring, how much you are saving, how much you are spending and what you want to leave at the end."

Duran also has some worrying news for active managers – the switch to index funds is "inescapable".

In seven years Vanguard has grown from $1.5 trillion to $4.7 trillion in seven years, snaring 90 per cent of all net inflows in the entire United States.

"They are winning on price and they are winning on the fact that indexing has kicked the tail out of active investing.

"On top of that you have regulators telling you you're not going to get in trouble if you've indexed your clients because it's cheap and diversified."

In fact there's no logical "upside" in trying to pick stocks, or even pick stock pickers on behalf of clients.

"You take more risk, you're probably not going to outperform over a full market cycle and the costs are higher. What is the advantage for the advisers, if they are not getting paid by the underlying product?"

Accepting the uncertainty of financial markets is one important step. Another one is to accept the uncertainty of life.

The human's role, Duran says, is not to build the plan "it's to change the plan".

"The ongoing course corrections is where the value resides in the human adviser. They know you and understand you."

"Your goals, dreams and aspirations will change. You will want to take a trip to Europe. You will see the perfect school or your kid may be a great athlete and you'll want to back that."

Your goals are fluid, Duran says. But what is constant is "intention".

The reason you get up and go to work probably doesn't change.

And the arguments you have with your partner over money also don't change – "one wants to spend it, and the other tends to want to be more protective of it."

That's the role of the adviser – to understand, and solve the natural tensions that arise: "because every human wants more than they can have", Duran says.

"That's just the truth. No matter how wealthy you are, you always want more than you can have, which means we are constantly in a battle of trade-offs."